Private Chinese company begins oil production in Venezuela under rare contract
Photo: Wikimedia Commons.
China Concord Resources Corp. (CCRC) has entered Venezuela’s oil sector in unprecedented fashion, becoming one of the few private Chinese companies to secure a 20-year production-sharing agreement in an OPEC member state. The deal, signed in May 2024, allows CCRC to fully operate two oilfields, Lago Cinco and Lagunillas Lago, in the Lake Maracaibo basin.
The agreement was made possible by Venezuela’s Anti-Blockade Law, passed in 2020 to circumvent U.S. sanctions and attract foreign capital through more flexible contracts. This legal framework permits private companies to assume complete control of oilfield operations in exchange for a share of production, a notable departure from Venezuela’s tradition of reserving such activities exclusively for state-run PDVSA.
CCRC plans to invest over USD 1 billion in rehabilitating infrastructure, reopening idle wells, and drilling new ones. Current output is about 12,000 barrels per day (bpd), thanks to the arrival of a Chinese drilling rig and approximately 60 technical staff deployed to restart production in about 100 wells. The long-term goal is to expand operations to 500 wells and reach a capacity of 60,000 bpd by late 2026.
Under the arrangement, light crude extracted will be supplied to PDVSA for domestic refining and consumption, while heavy crude will be exported directly to China, ensuring Beijing a stable source of supply in a tightening global oil market.
This contract is significant not only because it marks the first time a private Chinese oil company has secured such a long-term role in Venezuela, but also because it reflects the shifting landscape created by U.S. sanctions. Since 2019, Western majors have scaled back or exited the country, leaving room for Asian investors and smaller, less exposed players like CCRC.
Energy analysts describe the partnership as mutually beneficial: for Venezuela, it brings much-needed capital, technology, and operational expertise at a time of production decline; for China, it offers direct access to vast reserves of heavy crude and enhances its energy security strategy by diversifying suppliers.
Still, challenges remain. Venezuela’s oil sector suffers from chronic underinvestment, decaying infrastructure, and environmental risks. Political volatility also raises questions about the durability of contracts. Whether CCRC can sustain large-scale operations in such a complex environment will be closely watched by industry observers.
* Original text in Spanish. Translated by Large Language Model (LLM) technology.
Main Source:
Exclusive: Private Chinese firm producing oil in Venezuela under rare 20-year pact, source says – Reuters
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